Royal Treatment: Special Treatment for the Crown in Canadian Administrative Law

Paul Daly January 18, 2016

The paper I prepared for the ‘Deference or Drift’ conference (that I was unfortunately unable to attend in person) focuses on several areas of administrative law doctrine in which Canadian courts have given the Crown special treatment that they do not give statutory decision-makers. Here is the first part…

The Supreme Court of Canada has been very clear that administrative decision-makers may exercise only those powers granted by statute. A statutory body “enjoys no inherent jurisdiction”.[1] The leading case on the powers of administrative decision-makers is ATCO Gas & Pipelines Ltd. v. Alberta (Energy & Utilities Board).[2] There Bastarache J. explained that “in the area of administrative law” decision-makers obtain their powers from only two sources: “(1) express grants of jurisdiction under various statutes (explicit powers); and (2) the common law, by application of the doctrine of jurisdiction by necessary implication (implicit powers)”.[3]

Bastarache J.’s reference to the common law is apt to mislead. Implicit powers are not free-standing but must be tied to statutory authority. As Lord Shelborne advised, “this doctrine ought to be reasonably, and not unreasonably, understood and applied, and that whatever may fairly be regarded as incidental to or consequential upon, those things that the legislature has authorized ought not (unless expressly prohibited) to be held by judicial construction, to be ultra vires”.[4] Indeed, despite his reference to “the common law”, Bastarache J. took a relatively restrictive view of the permissible scope of implied powers: “the powers conferred by an enabling statute are construed to include not only those expressly granted but also, by implication, all powers which are practically necessary for the accomplishment of the object intended to be secured by the statutory regime created by the legislature”.[5]

Quite how tightly an implied power must be tethered to statute is uncertain. For instance, in R. (New London College) v. Home Secretary,[6] Lord Sumption and Lord Carnwath took different views on this question. For Lord Sumption, the Home Secretary’s authority to change her guidance on sponsorship applications by educational institutions flowed from her “statutory power…to administer the system of immigration control”, which “must necessarily extend to a range of ancillary and incidental administrative powers not expressly spelt out…”[7] For Lord Carnwath, however, an implicit power must be “reasonably incidental” to an express statutory power;[8] here, it was an “adjunct” to the “the specific function of providing for entry for study”.[9] But it is clear that a statutory tether is always required.

Where the Crown is concerned, however, the statutory tether can be cast off. Consider Pharmaceutical Manufacturers Assn. of Canada v. British Columbia (Attorney General).[10] At issue here was the province’s administration of its “largely non-statutory” Pharmacare program.[11] In order to cut costs, the province classified different but “therapeutically equivalent” prescription medications into “reference categories”, creating baseline prices above which patients would not be reimbursed; in exceptional circumstances, physicians could also apply for “special authority” to fully compensate Pharmacare patients for whom more expensive medication was prescribed.[12] There were “no regulations or statutory provisions governing the process by which categories of drugs are deemed to be therapeutically equivalent, or governing the granting of special authorities”.[13]

Citing authority,[14] Newbury J.A. accepted as a general matter “the general power of government to make executive decisions regarding the expenditure of public funds to which individual members of the public have no enforceable entitlement”.[15] In her view, “the Crown has the capacities and powers of a natural person”.[16] Just as a billionaire could set up a Pharmacare scheme and establish criteria for participation, so could the provincial Crown.[17] In doing so, the Crown would be subject to the law, in the sense that judicial review of the scheme would be available.[18] But the existence of judicial oversight did not affect the “Crown’s ability to establish Pharmacare in the first place or to restrict it by means of reference-based pricing in the second place”.[19]

More recently, in Canadian Doctors for Refugee Care v. Canada,[20] the Federal Court held that cuts to refugee healthcare were “cruel and unusual” treatment that violated the Charter. Understandably, the decision created a great deal of noise, but it is perhaps of greater note for a point relating to the scope of executive power to spend money without express statutory authorization. Mactavish J. concluded that the funding and consequently the defunding of the healthcare programme for refugees was intra vires the federal executive. First of all, no statutory authorization was necessary to support the programme given the broad executive authority accorded to the federal executive under the Canadian constitution. Mactavish J. did not clearly identify the source of the power to fund refugee healthcare. She cited Peter Hogg: “[s]ometimes, the term ‘prerogative’ is used loosely, in a wider sense, as encompassing all the powers of the Crown that flow from the common law…[but]…[n]othing practical now turns on the distinction between the Crown’s ‘true prerogative’ powers and the Crown’s natural-person powers, because the exercise of both kinds of powers is reviewable by the Courts”.[21] And she seemingly agreed that any potential distinction was unnecessary in this case, because in the absence of clear statutory language, “the Crown’s prerogative power to spend in an area not addressed by statute remains intact…”[22]

Given the broad scope of the Crown’s authority to act as a natural person, it was simply unnecessary to determine whether the refugee healthcare scheme was enacted by virtue of the prerogative or of the Crown’s common-law powers. This conclusion might, however, be criticized. Prerogative powers follow the constitutional division of powers between the federal government and the provinces. Healthcare is a provincial competence, not a federal competence (though the federal government’s exercise of its spending power has permitted it to exercise a great deal of authority in relation to healthcare). It might be said that the prerogative to establish ex gratia healthcare schemes is a provincial competence, which would render the refugee healthcare scheme ultra vires the federal government. There is, of course, a plausible counter-argument to the effect that the refugee healthcare scheme flows from the federal government’s authority over immigration. Nonetheless, this constitutional issue only arises if the power is prerogative in nature. If the scheme could be established pursuant to a common-law power, then there would be no division-of-powers problem. The distinction could matter and, indeed, may matter more in a different case.

It is clear that the Crown in Canada benefits from some inherent powers that are not granted by statute and that do not necessarily reside in the royal prerogative. It has the capacities of a natural person and, as such, can do those things that a natural person can do. Such latitude is not afforded to administrative decision-makers. As statutory bodies, they have no inherent capacities and possess only those powers expressly or implicitly conferred by statute.

[7]Ibid., at para. 28. He went on to note, however, that these ancillary or incidental powers could not be used in defiance of law or regulation and, moreover, that the Home Secretary could not use them to “adopt measures which are coercive; or which infringe the legal rights of others (including their rights under the Human Rights Convention); or which are irrational or unfair or otherwise conflict with the general constraints on administrative action imposed by public law”. See also R. v. Criminal Injuries Compensation Board, ex parte Lain, [1967] 2 Q.B. 864, at pp. 886-887.